The U.S. is just days away from imposing a 50 percent Section 338 tariff on roughly five percent of U.S. imports from Canada—and USMCA eligibility is no shield.
Canada is trying to defuse the threat. Its trade team, including chief negotiator Janice Charette and Trade Minister Domenic LeBlanc, was in Washington last week and remains engaged this week.
The U.S. wants Canada to accept steel and aluminum export quotas, drop retaliatory tariffs on U.S. goods, restore U.S. alcohol to Canadian store shelves, lift provincial procurement limits, and accept Washington’s position on Canadian dairy quotas. In exchange, the parties are discussing lower—but not eliminated—Section 232 steel and aluminum tariffs. Canada also wants relief on autos and forestry. If an interim deal lands, later talks would likely turn to defense purchases and auto rules of origin.
Progress has been real, but timing is tight. There is a credible chance that implementation of the tariff will be delayed while an interim agreement is finalized, but an extension of time to negotiate further is the most likely outcome. Full withdrawal of the tariff threat is less likely, as the U.S. will want to maintain leverage on Canada.
Any change to the Aug. 19 implementation date will likely come at the last minute. For now, companies should plan as if the tariff will apply.
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